This series takes concepts learned in an MBA program and adapts them for easy comprehension by scientists without a management background. This is currently the 19th part of the series and the third in drafting a business plan.
In the last few months, we've discussed why a scientist might want a business plan, and what format and style to use when writing the plan. This month explores, for the first time, the content of that plan. Appropriately enough, we've chosen to start the discussion of content with the first section of any business plan: the executive summary. We've started with the executive summary because, as its name suggests, it summarizes the main points of what is in the rest of the plan. What better way to introduce a business plan's content for the first time?
The executive summary serves two main purposes. First and foremost, it introduces your plan to the reader. This section is the first and often the only section a potential investor will read and should answer questions like: What are you trying to achieve with your business? Why should I care? What makes your business so special? How much money do you need? and What's in it for me?
Second, the executive summary acts as a kind of "check" for the writer. Any business idea should be easy enough to describe in a couple of pages. If your idea takes more than that to describe, chances are, it's too convoluted to actually work. One of the biggest problems that happen when scientists write business plans is that they make them too complex--in the academic world, a scientist is often recognized for completeness, thoroughness, and original thought. However, the business world seldom rewards these three attributes. Except for some notable exceptions that revolutionize industries, the plans that work best are classic, tried-and-tested business models. These plans are easy to describe, and even easier to implement. Too many businesses based on theoretically beautiful ideas have failed because they were just too darned complicated.
Write to Your Audience
Although "writing to your audience" applies to every part of your business plan, it is most important in the executive summary. This section sets the tone for the rest of the plan, and it is usually not until after reading the summary that the reader will decide whether to read the rest or not. So if the plan is going to be read by a venture capitalist, outline what your financial requirements are going to be. Discuss the size of the market for your product, and the time it will take to bring it to market. If the plan is going to be read by a potential business partner, discuss your competitors--both your competitors and your potential partners' competitors. And if it's going to be read by scientists, feel free to discuss your scientific breakthrough, product, or discovery with a little more depth than you would normally.
Summarize Highlights of the Plan
The executive summary should discuss the management team, the market and customers for the product you are designing, the current financial situation and how much money you need to get to market, any past accomplishments worth noting, and where you'll be in 3 years.
Most people find that while writing their plan, their emphasis changes. For example, you may not notice that the market for your lead product is smaller than that of your "backup" product until halfway through writing the plan. Make sure to come back to the executive summary after having finished the entire business plan to make sure that the items you've highlighted are consistent with the rest of the plan, both in content and in emphasis.
Don't worry if your plan changes as you write it. Just make sure that at the end of the day, what you have in the executive summary fits with everything else.
An executive summary shouldn't be more than two pages long. Otherwise, its whole point is lost. Although you might find it difficult to cover all the points we've discussed here in that length of space, it is possible to do. Just keep it to the basics--it's what the summary is for.
Give the Reader Something to Read On For
The primary goal of the executive summary is to persuade your audience to read the rest of the plan. So tell them why they'd want to invest in your company. Or what makes the secrets you're going to divulge in the rest of your plan so important. In short, tell them what's in it for them, what they'll get out of your venture, and how much it will cost them (in money, expertise, or time) to be a part of your dream.